House approves compromise on GM, Chrysler dealers

AP News
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Posted: Dec 10, 2009 6:19 PM

The House has approved a compromise plan to give General Motors and Chrysler dealers an appeals process to keep their showrooms open.

A $1.1 trillion spending bill approved Thursday includes provisions to give 789 Chrysler dealers closed in June and more than 1,350 GM dealers expected to be shut down next year an opportunity to challenge the automakers' decisions.

GM and Chrysler have attempted to shed dealerships as part of their government-led bankruptcies. But the moves have riled up members of Congress, who have received numerous complaints from dealers being shut down.

"We need to make sure that the companies give a fair consideration to dealers that have put a lot of their time, sometimes generations, money, effort and talent into building their dealerships," said House Majority Leader Steny Hoyer, D-Md.

General Motors Co. and Chrysler Group LLC said last week they would reconsider decisions to close the dealers as part of a compromise plan including face-to-face reviews with dealerships and binding arbitration for dealers who challenge the decisions.

But dealers and key lawmakers pushed back, saying the GM and Chrysler approaches wouldn't do enough. The compromise developed by Hoyer and Dick Durbin of Illinois, the Senate majority whip, requires the arbitration panels to consider a number of circumstances, giving some car dealerships a better chance of surviving.

The arbiter would weigh issues such as the economic interests of the terminated dealer, the company and the public, the dealer's profitability during the past four years and conditions that could have led to a poor sales performance, including natural disasters and a poor local economy.

"We do not want to hurt the auto manufacturers in their restructuring efforts moving forward, but auto dealers are a big part of our local communities and national economy, and they should be treated fairly," said Rep. Dan Maffei, D-N.Y.

The spending plan needs to be approved by the Senate. Durbin said he does not expect the dealer provisions to be changed.

GM is working on a "resolution that balances the interests of GM and its dealers," the company said in a statement.